Suitors offer proposals for Chevy Centre

Two of the companies looking to run the downtown Youngstown arena operate facilities in Cleveland.

By DAVID SKOLNICK

CITY HALL REPORTER

YOUNGSTOWN — Of the three preliminary proposals from companies wanting to run the city-owned Chevrolet Centre, only one provides details on the amount of money it would generate managing the facility.

And that one, from Global Spectrum of Philadelphia, would still result in the city’s having to pay about $500,000 a year toward its center construction debt.

The two other companies want to discuss the facility in greater detail with city officials before giving estimates.

Global Spectrum of Philadelphia offers two scenarios.

Neither of them comes close to meeting the city’s annual debt service of $755,650, the amount is pays annually to cover just the interest on the $11.9 million the city borrowed as its share of the $45 million center’s construction cost.

In its first proposal, Global Spectrum would be paid $10,000 a month to manage the center and also get 20 percent of the revenue from items such as the rental of luxury suites and advertising and sponsorship sales.

The previous management company got $12,500 a month plus 15 percent of the other revenues.

With fees of about $200,000 paid to Global Spectrum for yearly management and the services, the company estimates the center would still have a $297,611 profit in its first fiscal year.

Global Spectrum’s second proposal would have it get no management fee. However, the company would get larger percentages of the center’s income, varying with revenue totals. The city’s estimated profit for the center under that scenario is $241,986 in Global Spectrum’s first year operating the facility, according to the proposal.

While neither gets the city to close the break-even point, Global Spectrum points out the figures are significantly better than what Global Entertainment Corp., a Phoenix company, did for the center in its two years running the facility.

The center ended its last fiscal year in September with a $254,388 deficit.

Its first-year deficit was $23,653.

While the city won’t reach its debt service amount in its first year with Global Spectrum, the center’s profit would increase each year and probably generate enough money in time to achieve that goal, according to Todd Glickman, Global Spectrum’s vice president of business development and client relations.

Global Spectrum has been interested in the city facility for years, and is able to give financial specifics because of its familiarity with the center, Glickman said.

In its proposal, Global Spectrum states it’s willing to invest up to $250,000 on revenue-generating projects at the center, such as a half-house curtain system for smaller events. That system, common at numerous indoor arenas, reduces the size of the center by closing off seats with a large curtain, thus allowing a more intimate setting for events with lower attendance.

The company manages or provides consulting services to 69 facilities, including The Ohio State University’s Jerome Schottenstein Center, Duke Energy Center in Cincinnati and Citizen Bank Park in Philadelphia.

The company states in its proposal that it doesn’t manage any facilities that compete with the Chevrolet Centre and is willing to sign a no-conflict relationship for the term of the management agreement.

The two other proposals came from:

•SMG of Philadelphia, which manages 209 arenas, stadiums, convention centers, performing arts centers and recreation/equestrian facilities worldwide, including the Wolstein Center in Cleveland, the Nationwide Arena in Columbus, and the Peterson Center and Mellon Arena, both in Pittsburgh.

•A partnership between Cavaliers Operating Co. of Cleveland, which owns and operates the Cleveland Cavaliers basketball team and its home center, the Quicken Loans Arena, and International Facilities Group of Chicago, which has developed and constructed more than 34 centers and stadiums.

In their proposals, SMG and the Cavaliers/IFG wrote that the Youngstown facility would benefit from the company’s operating arenas nearby.

SMG wrote that its “contacts, leverage and experience in the region” would help the center’s advertising and sponsorships sales, product and service right sales, naming rights renewals and sales, and with booking events.

SMG’s operations of “large and busy” facilities nearby gives it regional booking strength.

The company is willing to discuss compensation options with the city “to strike the best possible arrangement for all.”

The Cavs/IFG proposal stresses that its northeast Ohio proximity is a great benefit to Youngstown. Also, the smaller size of the companies compared to SMG and Global Spectrum means the Chevrolet Centre would represent “a larger share of our venue business than it will for others and we will respond with commitment and gratitude,” the Cavs and IFG wrote in their proposal.

The companies won’t be “distracted by other accounts in neighboring regional markets,” the proposal reads.

The Youngstown facility would greatly benefit from the Cavaliers’ data base of more than 250,000 customers by directly promoting events to those people via the Internet or mail, according to the proposal.

Like SMG, the Cavs/IFG proposal states the companies are very open to a compensation structure that would benefit all parties.

The Cavs/IMG proposal also comes with a guarantee that a National Basketball Association D-League team affiliated with the Cavaliers will be playing its home games at the center by 2009.

One of Global Spectrum’s sister companies owns the Philadelphia 76ers basketball team and a D-League team for the Chevrolet Centre could be included in its proposal, Glickman said. The city opened the proposals Friday and expects to have a management firm in place before March 30.

It ended its agreement with Global Entertainment Oct. 31 after expressing displeasure with how the company was running the center. An interim director is running the center for the time being.